EQT Private Capital / Recipharm AB

Pharmaceutical contract development & manufacturing (CDMO services)

$157.0B Global pharmaceutical CDMO market 2021 (USD MM) · 7.5 Projected CDMO CAGR through 2028 (%)

Disease Overview

The pharmaceutical contract development and manufacturing organization (CDMO) sector provides outsourced API synthesis, drug product formulation, sterile fill-finish, lyophilization, packaging and lifecycle services to biotech and pharma sponsors. The 2021 global CDMO market was estimated at ~$157 billion and projected to grow at 7-8% CAGR through 2028, driven by (a) accelerated outsourcing penetration as pharma sponsors prioritized capital-light models, (b) COVID-19 vaccine and therapeutic surge demand for sterile fill-finish and large-scale biologics capacity, (c) growth of complex modalities (mRNA, viral vectors, ADCs, peptides, oligonucleotides, sterile injectables, inhalation) and (d) consolidation as private equity and large CDMOs pursued scale and modality breadth. Recipharm AB, headquartered in Stockholm, was a top-10 global CDMO with ~9,000 employees across 30+ facilities in Europe, North America, India and Israel, offering inhalation (Bespak/Aesica), sterile injectables, lyophilization, oral solid dose, peptides, biologics fill-finish and clinical trial supplies. The company served 95% of the top 50 pharma. Recipharm reported FY2020 revenue of SEK 8.5 billion (~$1.0B) and EBITDA margins in the mid-teens. Customers include Merck, Sanofi, Pfizer and a long tail of biotech sponsors. Sterile manufacturing capacity scarcity, post-Brexit European supply chain shifts and COVID-19 vaccine fill-finish demand created tailwinds at deal date.

Competitive Landscape

At deal date (Feb 2021), the global CDMO competitive landscape was undergoing rapid consolidation led by private equity. Top-tier full-service competitors included Lonza (CHF 4.5B revenue, biologics + small molecule + cell & gene), Catalent (NYSE: CTLT, $3.1B revenue, sterile fill-finish + biologics + Paragon viral vector), Thermo Fisher Patheon (post-2017 Patheon acquisition, biologics + sterile + drug product), Samsung Biologics (KRX:207940, biologics CMO leader), Boehringer Ingelheim BioXcellence (biologics CDMO arm), WuXi Biologics (HK:2269, China-headquartered biologics) and WuXi AppTec (HK:2359). Mid-tier and specialty players included Cambrex (PE-owned by Permira since 2019), Siegfried, Vetter (sterile injectables), Aenova, Famar, Adare Pharma Solutions (PE-owned by Frazier), Almac, Piramal Pharma Solutions and Esteve. Sterile/biologics-focused CDMOs Catalent, Lonza, Vetter and Samsung Biologics commanded premium valuations on COVID vaccine fill-finish demand. PE consolidation activity 2018-2021 included Cinven's Stada-pharmaceutical platform, Carlyle/GTCR's Albany Molecular Research, Permira-Cambrex (~$2.4B), and KKR's investments in Coherus and Therapure. EQT's prior pharma/healthcare experience included BSN Medical, Press Ganey, Galderma and Anticimex platform deals. The Recipharm transaction at SEK 220/share reflected ~14x EV/EBITDA, in line with sterile-fill-heavy CDMO comps including Catalent (~16x) and Vetter implied multiples.